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REEF applies for industry award variation for commission-only salespeople

With COVID-19 likely to heavily impact commission-only agents, the Real Estate Employer’s Federation (REEF) has applied for a variation to the Industry Award in a bid to postpone next year’s annual Minimum Income Threshold Amount (MITA) reviews.

REEF CEO Bryan Wilcox said the application to the Fair Work Commission was filed by REEF and the Real Estate Employer’s Federation of SA/NT, and sought a variation of the Real Estate Industry Award 2020.

If successful, it will enable employers to elect to postpone annual MITA reviews until 1 October 2021, allowing commission-only agents more time to meet the MITA criteria.

“It seems without doubt that the COVID-19 crisis is clearly going to severely reduce the number of real estate sales transactions,” Mr Wilcox said.

“All indications, including those from State and Federal Governments suggest that the negative effects from the COVID-19 crisis will be felt for at least six months, but perhaps longer. 

“It therefore follows that a commission-only salesperson will be dramatically denied the prospect for at least six months this year to make any substantial income-earning contribution towards their MITA review.” 

Mr Wilcox explained for most commission-only employees a MITA review must next occur by 1 April, 2021 (or their employment anniversary date for those employed after 1 April, 2018). 

“With this in mind, the Real Estate Employer’s Federation (REEF) and the Real Estate Employer’s Federation of SA/NT (REEFSA/NT) have lodged an application with the Fair Work Commission  to vary the Real Estate Industry Award 2020,” Mr Wilcox said.

“In summary the application asks the Fair Work Commission to vary the Award to allow employers to elect to postpone any annual MITA review out to 1 October, 2021.” 

“By resetting the MITA review date it will allow a commission-only salesperson the opportunity to list and sell real estate in hopefully better times. 

“It will literally throw a six-month lifeline to commission-only employees and will avoid employers having to unfairly judge them almost entirely on their 2020 sales performance.”

REEF has engaged Nigel Ward, CEO of Australian Business Lawyers to make the application before the Fair Work Commission. 

Mr Ward is one of Australia’s leading Industrial Relations experts and was recently successful in having the Clerks Award amended.

Mr Wilcox said the Award variation has been put to the unions who are considering whether they will support REEF’s application.

REEF’s MITA refresher – By Bryan Wilcox

Under the Real Estate Industry Award, where an employer wants to engage a sales agent on a commission-only basis, they need to ensure that the agent meets a range of qualifying criteria. Importantly, they must achieve the Minimum Income Threshold Amount (MITA).

So what exactly is the MITA? And what are the key things employers need to know to ensure compliance with the Real Estate Industry Award? Who is eligible to be employed on a commission-only basis?

To be engaged on a commission-only basis, a sales agent must satisfy all of the following criteria. They must:

Be engaged in either property sales or commercial, industrial or retail leasing at the Real Estate Employee Level 2 (Representative Level) or higher. They cannot be engaged at the Real Estate Employer Level 1 (Associate Level), as a casual or junior, on a part-time arrangement or as a trainee

AND

Agree in writing to be remunerated on a commission-only basis and have a written agreement that sets out the basis upon which the commission is to be calculated

AND

Have been issued with either a Real Estate Licence or be registered or permitted to perform the duties of a real estate salesperson under real estate law

AND

Have been employed in property sales or commercial industrial or retail leasing for a consecutive period of at least 12 months in the three years prior to entering into the commission-only agreement

AND

Be at least 21 years of age

AND

Establish they have achieved the MITA.

What is the MITA?

The MITA is the income target that must be satisfied if a sales agent is to be lawfully engaged on a commission-only basis.

It is assessed at 125 per cent of the agent’s minimum award rate of pay for their classification, calculated as an annual amount (excluding statutory superannuation and allowances, such as car and phone).

How much is the MITA?

On 1 April 2020, the MITA for a Real Estate Employee Level 2 (Representative Level) was $56,214.

An agent can only continue to be employed on a commission-only basis if they meet the MITA.

What evidence is needed to satisfy the MITA?

The employer may rely on any one of the following documents as proof that the MITA has been satisfied:

  • The agent’s Individual Payment Summary (formerly known as the Group Certificate)
  • The agent’s pay slips
  • The agent’s commission statement records or other sales records.

The employer can also request that an agent provide a statutory declaration stating the veracity of any documentation relied upon for the purposes of satisfying the MITA.

What is the annual MITA review?

The Real Estate Industry Award requires employers to conduct a mandatory annual review to determine if their commission-only sales agents can continue to be paid on a commission-only basis.

This annual MITA review ensures commission-only agents meet the Minimum Income Threshold Amount.

When must the annual MITA review occur?

The timing of a commission-only agent’s mandatory annual MITA review will depend on their date of commencement with the agency as a commission-only employee.

Agents engaged prior to 2 April 2018 – Where a commission-only agent was engaged on or before 2 April 2018, their first annual MITA review had to occur by 1 April 2019.

Subsequent reviews will be on 1 April each year thereafter. The next review, therefore, must take place by 1 April 2021.

For example, Jane is a commission-only salesperson and started with ABC Real Estate on 4 November 2017. Her first mandatory annual MITA review had to occur by 1 April 2019 and subsequent reviews for Jane will be on 1 April each year thereafter.

Agents engaged after 2 April 2018 – Where a commission-only agent was engaged after 2 April 2018, their annual MITA review must take place 12 months after their date of employment as a commission-only agent.

For example, Henry was engaged as a commission-only salesperson with XYZ Estate Agents on 25 July 2019. His first mandatory annual MITA review will be on 25 July 2020. Subsequent reviews will be on 25 July each year thereafter.

What if an agent fails the annual MITA review?

If, after the annual MITA review, a commission-only agent’s gross income (excluding statutory superannuation and allowances) is found to be less than the MITA, they cannot continue to be employed on a commission-only basis.

If an agent continues to be employed on a commission-only basis after failing an annual MITA review, serious consequences may flow for an employer, including penalties for breach of the Real Estate Industry Award and underpayment claims.

Where a commission-only agent fails their annual MITA review, the employer has two options:

  • Immediately move the agent to a salaried arrangement – This means the agent is entitled to receive a minimum award wage, allowances and other entitlements. An agreed commission structure may be included in the arrangement, though this isn’t mandatory.
  • Take steps to terminate the employment – A commission-only agent can be terminated where they fail an annual MITA review, but only after following a formal performance management process. If an employer terminates the agent without conducting this process, then terminating their employment will carry significant risk; for example a potential unfair dismissal claim.

The bottom line

If a commission-only sales agent does not satisfy the annual MITA review, they are disqualified from continuing to be paid on a commission-only basis.

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